Engie Brasil Energia S A : Earnings Release - 4Q21

Earnings

Release

4Q21 and 2021

For Immediate Release

Additional Information:

Eduardo Sattamini

Chief Executive and Investor Relations Officer [e-mail]

Rafael Bósio

IR Manager [e-mail] Tel.: [phone]

[e-mail]

Video Conference

On 02/15/2022 at 9:00 a.m. (EDT):

in Portuguese (simultaneous translation into English)

Further details on Upcoming Events section, available on page 39.

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www.engie.com.br/investidores

Florianópolis, Brazil, February 14, 2022. ENGIE Brasil Energia S.A. ("ENGIE" or "Company") - B3: EGIE3, ADR: EGIEY - announces earnings for the Fourth Quarter and twelve-months period ending December 31, 2021 (4Q21, 12M21). The information in this release is shown on a consolidated basis and in accordance with Brazilian accounting principles and practices. The values are expressed in Brazilian Reais (R$), except where otherwise indicated. Rounding effects may cause differences in percentage changes, when comparing the comments on Economic-Financial Performance, presented in R$ million, with the Income Statement (Appendix III), presented in R$ thousand.

Company delivered growth in transmission and wind generation, advanced in the decarbonization in addition to mitigate impact on sales volume in a year with a hydroelectric generation deficit of around 27%.

The Board of Directors approved the proposal for complementary and intermediate dividends. Total earnings distribution for 2021 reached R$ 2,038 million (R$ 2.4978/share), a dividend yield of 6.2%.

• In 2021, the Company booked R$ 1,591 million from hydrological risk renegotiations under Laws 14.182/2021 and 14.052/2020.
• The Company reported a non-recurrent effect of impairment of R$ 1.076 million, in 2021, due to the revaluation of the Jorge Lacerda and Pampa Sul Thermal Power Plants and the subsidiary ENGIE Geração Solar Distribuída.
• The Company posted Adjusted Ebitda1 of R$ 7,217 million in 2021, an increase of 12.3% (R$ 790 million) compared to 2020.
• Adjusted net income was R$ 2,369 million (R$ 2.9023/share) in 2021, 11.8% (R$ 317 million) lower than posted in 2020.
• The average price of the energy sales agreements, net of taxes on revenues and trading operations, was R$ 202.94/MWh in 2021, 4.9% higher than registered in 2020.
• Excluding trading operations, the energy sales volume in 2021 was 35,801 GWh (4,087 average MW), 5.4% lower than sold in 2020.
• The closing of the sale of the Jorge Lacerda Thermoelectric Complex took place in October allowing the renewable installed capacity of the Company's own generator park to reach 95.8% of the total.
• In December, the Novo Estado Transmission System was authorized by the National System Operator (ONS) to begin commercial operations of the Serra Pelada Substation, its reactors and the Serra Pelada - Itacaiúnas line, this representing the first stage in the project's operations.
• ENGIE Brasil Energia received ISO 37001 - Anti-bribery Management System certification from Euro Compliance.

• The Company's Integrated Management System (SIG) was certified by Bureau Veritas Certification, encompassing the energy generation services at all the hydropower plants and incorporating NBR ISO 9001 (Quality Management), NBR ISO 14001 (Environmental Management) and ISO 45001 (Occupational Health and Safety Management).
• The Board of Directors approved the distribution of Interest on
  Shareholders' Equity in the amount of R$ 60 million (R$ 0.0735/share).

Subsequent Events

• The Company is one of three Brazilian companies to be included in the Corporate Knights magazine's Global 100 Most
  Sustainable Companies out of around 6.9 thousand publicly listed companies worldwide.
• The Board of Directors approved the proposal for the distribution of intermediate dividends in the amount of R$ 638.7 million (R$ 0.7828/share) and complementary dividends amounting to R$ 549.8 million (R$ 0.6738/share). Total earnings distribution for 2021 reached R$ 2,038.0 million (R$ 2.4978/share), equivalent to 100% of the adjusted net income of 2021 and retained earnings allocated to the profit reserve in 2020.
• The Board of Directors approved the acquisition of the Paracatu and Floresta Photovoltaic Complexes - which add up 259.8 MWp of installed capacity - for the total amount of R$ 625 million, according to the purchase recommendation report submitted by the Independent Special Committee for Transactions with Related Parties.

Consolidated (In millions of R$)	4Q21	4Q20	Chg.	12M21	12M20	Chg.
Net Operating Revenue (NOR)	2,769	3,769	-26.5%	12,541	12,259	2.3%
Results from Operations (EBIT)	750	2,065	-63.7%	4,898	5,570	-12.1%
Ebitda (1)	1,084	2,288	-52.6%	5,941	6,484	-8.4%
Adjusted Ebitda (2)	2,248	2,387	-5.8%	7,217	6,427	12.3%
Ebitda / NOR - (%) (1)	39.1	60.7	-21.6 p.p.	47.4	52.9	-5.5 p.p.
Adjusted Ebitda / NOR - (%) (2)	81.2	63.3	17.9 p.p.	57.6	52.8	4.8 p.p.
Net Income	78	1,030	-92.4%	1,565	2,797	-44.0%
Adjusted Net Income	808	1,095	-26.2%	2,369	2,686	-11.8%
Adjusted Return on Equity (ROE) (3)	29.9	34.7	-4.8 p.p.	29.9	34.7	-4.8 p.p.
Adjusted Return on Invested Capital (ROIC) (4)	22.4	22.5	-0.1 p.p.	20.2	22.5	-2.3 p.p.
Net Debt (5)	14,612	11,786	24.0%	14,612	11,786	24.0%
Gross Power Production (avg MW) (6)	3,930	4,628	-15.1%	4,328	4,003	8.1%
Energy Sold (avg MW) (7)	4,345	4,485	-3.1%	4,087	4,321	-5.4%
Average Net Sales Price (R$/MWh) (8)	185.96	190.87	-2.6%	202.94	193.43	4.9%
Number of Employees - Total	1,237	1,573	-21.4%	1,237	1,573	-21.4%
EBE Employees	1,135	1,444	-21.4%	1,135	1,444	-21.4%
Employees on Under Construction Plants	102	129	-20.9%	102	129	-20.9%

1. Ebitda: net income + income tax and social contribution + financial result + depreciation and amortization.
2. Adjusted Ebitda: net income + income tax and social contribution + financial result + depreciation and amortization + impairment + non-recurrent.
3. ROE: adjusted net equity for the past 4 quarters /shareholders' equity.
4. ROIC: effective tax rate x adjusted EBIT / invested capital (invested capital: debt - cash and cash equivalents - deposits earmarked for debt servicing + SE).
5. Adjusted amount, net of gains from hedge operations.
6. Total gross electricity output from the plants operated by ENGIE Brasil Energia.
7. Disregarding sales for quota regime (Jaguara and Miranda HPPs).
8. Net of taxes and trading operations.

ENGIE Brasil Energia - Earnings Release 4Q21 and 2021

"… we continue working on what matters to society, based on constant consultation with the communities and other stakeholders, at the same time as advancing progressively in the direction of a better future including the fair and accessible energy transition without leaving anyone behind."

We live in times where society is subject to rapid, involuntary and profound changes. In these last two years, the words challenge and resilience have dominated the discourse, while at the practical level we have come to understand the dimension which is really essential to the planet and to ourselves. Priority agendas emerged during this period, opening up opportunities for us to evolve in terms of humanity, this translating into renovation and a necessary welcoming stage to the future.

Despite the uncertainty surrounding the pandemic, economic recovery was responsible for driving the strengthening in the growth agenda and the intensification of business opportunities. Better still, there was a maturation process in the private sector ensuring that this ambition came to fruition in a more responsible and sustainable manner making way for placing ESG (Environment, Social & Governance) themes at the strategic core of corporate decision making.

Based on this common understanding, we saw an exponential growth in the public commitment for combating climate change, which supports the ENGIE Group's successful strategy of accelerating the transition to a carbon neutral economy and contributing to the decarbonization journey of our clients.

In parallel, we increased renewable sources in the national electric energy matrix, offering the necessary infrastructure, and maximizing our historic commitment to socio-environmental action in the communities of which we are a part.

Our operation:

But it was not only the lessons learnt from the pandemic in 2021. The scenario in the electric energy sector became even more complex in the light of the hydrology crisis experienced in Brazil throughout the year - a continuation of below average hydrology that has been a characteristic since 2012 and feeding through to shortfalls in hydroelectric generation in the country as a whole. In the context of the Company, these impacts were partly mitigated

through an extraordinary operational effort focused on maintaining a high degree of efficiency and uptime together with active commercial management of the portfolio with an emphasis on an optimized strategy

of contracting and sale. When compared to 2020, we faced a year with a Settlement Price for Differences (PLD) 58.0% higher in the Southeast

subsystem and a hydrological generation deficit of 27.0%, 7.2 p.p. higher than the previous year.

From the strategic point of view, this situation confirmed the relevance of diversification of our operations through the expansion of other renewable sources, especially wind and solar, as well as entry into new segments such as energy transmission and the transportation of natural gas - an activity performed by Transportadora Associada de Gás - TAG.

Added to this were the positive results arising from the recognition during the year of the effects of Law 14.182/21, permitting the reimbursement of costs relative to renegotiation of hydrological risk to the tune of R$ 1.6

billion. In this context, adjusted Ebitda reached R$ 7.2 billion, a year-on-year increase of 12.3% even in the face of a challenging hydrological scenario. Net income reported a reduction of 44.0% totaling R$ 1.6 billion, this despite the impairment and the impacts from accelerating inflation reflected in the restatement of concessions payable and other financial expenses. With respect to the latter effect, we would point out that the indexation of energy sales agreements resulted in an increase of 4.9% in average price in the period, thus tending to neutralize inflationary effects on results over the medium-term. Excluding impairment and other non- recurring amounts booked in 2021, adjusted net income reached R$ 2.4 billion, a decrease of 11.8% over the total of 2020.

We are pursuing the future vision of ENGIE Brasil Energia in a responsible way assuring both shareholder remuneration as well as the competitivity necessary for the sustainable expansion of the businesses through the implementation of new generation and infrastructure projects. Among these are the Campo Largo II Wind Complex in the state of Bahia, this going into full commercial operation in August, and the Santo Agostinho Wind Complex in the state of Rio Grande do Norte, where construction was begun in 2021. This will be ENGIE's largest wind energy project in Brazil with an installed capacity of 434 MW with investments worth approximately R$ 2.3 billion (baseline month December 2020).

As a whole, our wind complexes now offer 1.2 GW of installed capacity, bringing with them local socio-environmental development and greater renewable energy to the National Interconnected System (SIN).

In the infrastructure sphere, in August, we were able to announce the energization of the first lines and substations in the Gralha Azul Transmission System, thus bringing forward by 16 months delivery time stipulated by the National Electric Energy Agency (Aneel). As for Novo Estado - which in December energized its first substation - the challenges are more profound. In 2021, this project reported accidents with nine fatalities among the employees of contracted companies. It is with much regret and profound respect for their tragic loss, that we extend our solidarity to the families of the deceased.

As is demonstrated by our safety track record and culture, for ENGIE Brasil Energia the loss of life in the work environment is unacceptable. Thus, we spare no effort in implementing action and correction plans for ensuring the effective application of our occupational health and safety guidelines and practices by contracted companies for the execution of projects.

ENGIE Brasil Energia - Earnings Release 4Q21 and 2021

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Our future vision:

ENGIE Brasil Energia continues to be alert to market opportunities, understanding as essential in the context of the energy transition that investments in renewable generation and transmission systems are in step with one another. In this way we contribute to the offtake of clean energy generated by our current and future assets - we have projects at an advanced stage of development which total 2.1 GW of renewable energy.

Considering the current state of the market, with a plethora of projects, we believe that it is the right moment to invest in the expansion of portfolio volume, at the same time always evaluating the macro-economic scenario and balancing out risks against returns - factors critical to our recognized financial discipline and thus to the economic sustainability of the business. An important step in this direction was taken in September 2021 with the acquisition of the Assú Sol Photovoltaic Complex in Rio Grande do Norte with an installed capacity of up to 750MW.

At the end of the year, we recorded 95.8% of renewable sources composing our own generator complex. This represents a historical landmark and the result of the ongoing process in decarbonizing ENGIE's portfolio in Brazil. In October we concluded the sale to FRAM Capital of the Jorge Lacerda Thermoelectric Complex located in Capivari de Baixo (SC). This transaction was conducted in such a way as to ensure a gradual and fair transition in the region's economy - reducing the local socio-environmental impacts that could potentially result from an abrupt termination of these operations. In the same context, we continue to analyze proposals for the sale of Pampa Sul Thermoelectric Plant in Rio Grande do Sul, with a view to having entirely renewable energy generation by the end of 2022.

As to trading, we remain focused on the excellence of delivery to our Free Energy Market clients, to which we offered in 2021 a range of solutions anchored in digitalization. Our digital Energy Place relationship platform brought with it new functionalities in attending free consumers.

Our commitments:

Building relations of value, the partnership with the most varied of range of stakeholders - employees, investors, clients and communities, among others - goes well beyond the commercial sphere. Evidence of this was the launch of programs such as Parcerias do Bem (Partnerships for Wellbeing) for inviting our clients to engage in our initiatives of social responsibility for fostering sustainable development in different regions of the country. Other examples of such initiatives are Women in Our Neighborhood where the focus is on training and generation of income for women and commitments to gender equality and initiatives for accelerating women's careers in Operations and Maintenance (O&M).

Consequently, connected one to the other and to the planet on which we live, we continue working on what matters to society, based on constant consultation with the communities and other stakeholders, at the same time as advancing progressively in the direction of a better future including the fair and accessible energy transition without leaving anyone behind.

There is much to be done for generating and transmitting the clean energy necessary for driving the sustainable development of the country. We have no time to lose! Let's go!

Eduardo Antonio Gori Sattamini
Chief Executive and Investor	Marcelo Cardoso Malta
Relations Officer	Chief Financial Officer

ENGIE Brasil Energia - Earnings Release 4Q21 and 2021

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Energy Generation Assets

ENGIE Brasil Energia is part of the largest independent power producer group in the country and, at the end of the 4Q21 had 8,218.7 MW of installed capacity and operates a generating complex with 9,939.4 MW, comprised of 68 plants (11 hydro, one thermal and 56 complementary energy source plants - biomass, SHP, wind powered and solar), 64 of which are wholly-owned by the Company and four (the Itá, Machadinho and Estreito Hydro Power Plants and the biomass-fired Ibitiúva Bioenergética co- generation plant) jointly-owned through consortia with other companies.

On October 18, 2021 occurred the closing of the sale operation for the Jorge Lacerda Thermal Power Complex, in line with the ENGIE Group's decarbonization process.

Generating Complex as of December 31, 2021

				Installed Capacity (MW)	Concession/	Assured energy
						(aMW)
Power Plants		Source	Location		Company's	Authorization
	Total	Company's
				Share	expiration date *
					Share
Itá		Hydro	Uruguai River (SC and RS)	1,450.0	1,126.9	Dec/32		564.7
Salto Santiago		Hydro	Iguaçu River (PR)	1,420.0	1,420.0	Nov/30		733.3
Machadinho		Hydro	Uruguai River (SC and RS)	1,140.0	403.9	Oct/35		165.3
Estreito		Hydro	Tocantins River (TO/MA)	1,087.0	435.6	Jan/43		256.9
Salto Osório		Hydro	Iguaçu River (PR)	1,078.0	1,078.0	Apr/31		502.6
Cana Brava		Hydro	Tocantins River (GO)	450.0	450.0	Jan/36		260.8
Jaguara		Hydro	Grande River (MG)	424.0	424.0	Jun/48		341.0
Miranda		Hydro	Araguari River (MG)	408.0	408.0	Jun/48		198.2
São Salvador		Hydro	Tocantins River (TO)	243.2	243.2	Jun/40		148.2
Passo Fundo		Hydro	Passo Fundo River (RS)	226.0	226.0	Apr/31		113.1
Ponte de Pedra		Hydro	Correntes River (MT)	176.1	176.1	Mar/37		133.6
Total - Hydro				8,102.3	6,391.7			3,417.7
Pampa Sul		Thermal	Candiota (RS)	345.0	345.0	Mar/50		323.5
Total - Thermal				345.0	345.0			323.5
Umburanas Complex - Phase I	1	Wind Farm	Umburanas (BA)	360.0	360.0	Aug/49		213.3
2		Wind Farm	Umburanas (BA)	326.7	326.7	Jul/50		166.5
Campo Largo I Complex
3		Wind Farm	Umburanas (BA)	361.2	361.2	Dec/54		192.5
Campo Largo II Complex
4		Wind Farm	Trairi (CE)	212.6	212.6	Sep/41		97.2
Trairi Complex
Ferrari		Biomass	Pirassununga (SP)	80.5	80.5	Jun/42		35.6
Ibitiúva Bioenergética		Biomass	Pitangueiras (SP)	33.0	22.9	Apr/30		13.6
Assú V		Solar	Assú (RN)	34.0	34.0	Jun/51		9.2
Lages		Biomass	Lages (SC)	28.0	28.0	Oct/32		13.7
Rondonópolis		SHP	Ribeirão Ponte de Pedra (MT)	26.6	26.6	Dec/32		14.0
José Gelazio da Rocha		SHP	Ribeirão Ponte de Pedra (MT)	24.4	24.4	Dec/32		11.9
Nova Aurora		Solar	Tubarão (SC)	3.0	3.0	not applicable	5	0.3
Tubarão		Wind Farm	Tubarão (SC)	2.1	2.1	not applicable	5	0.3
Total - Complementary				1,492.1	1,482.0			768.1
Total				9,939.4	8,218.7			4,509.3

• It does consider the extension of certain power plants concessions, resulting from adherence to the renegotiation of the hydrological risk referred to in Laws 14.052/2020 and 14.182/2021.
  1 Complex comprised of 18 power plants.
  2 Complex comprised of 11 power plants.
  3 Complex comprised of 11 power plants.
  4 Complex comprised of 8 power plants.
  5 For generating plants with installed capacity lower than or equal to 5 MW the legal instrument applicable is the record.

ENGIE Brasil Energia - Earnings Release 4Q21 and 2021

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